The changing face of the global economy seems to be shaking up the Indian Life Insurance sector, with the European and American companies regressing, and the Japanese insurance firms penetrating the Indian markets, despite the constant pressure for raising the unswerving foreign investment threshold from 26 percent to 49%.
Currently, the American Insurers New York Life and AIG have already bid adieu to the Indian insurance sector by concluding their partnership with Max New York Life and Tata AIG Life, correspondingly. Meanwhile, the European stake holders ING and the Ageas International are contemplating of exiting their association with Vysya and IDBI banks, respectively.
Undoubtedly, such exists sound alarming for the policy holders in India. Nonetheless, Kshitij Jain, M.D. & C.E.O. ING Vysya Life Insurance Company alleged, “The departure of foreign collaborators does not indicate that they are losing faith in India. Rather, they are maneuvering their trade due to the financial upheavals faced in their own country. For the Indian life insurance companies, finding a new partner is neither a struggle, as fresh lease of foreign investors are positively moving forward.”
It seems the purview of ING Vysya’s boss is on the right track, as the Japanese insurance companies like Nippon Life and Mitsui Sumitomo recently became shareholders in Reliance Life and Max New York Life, respectively.
Furthermore, Mr. Jain alleged, “Escalating the FDI threshold will facilitate the domestic companies to gain the availability of the capital, easily. This will indeed make the Indian insurance industry more attractive to the foreign investors. Although the Indian companies are well-stacked with resources, yet reform in this policy will augment the investments.”
On the other hand, the insurance watchdog is nudging the domestic market to opt for mergers and acquisitions on the foreign soil.
Sudhin Roy Chowdhury, member, Insurance Regulatory and Development Authority (Irda) at the Fifth Annual Insurance Summit of the Indian Chamber of Commerce alleged, “Just like the foreign partners, why can’t we broaden our horizons? The foreign investors are eager to take their chances with us, why should we?”
He left the audience pondering by citing the example of Allianz, the German insurance company that earns its 60% revenue from outside of Germany.
Counteracting to Mr. Chowdhury’s remarks, the CFO of Birla Sunlife, Mayank Bathwal said, “Indian insurance industry acquiring companies in foreign lands is an impulsive concept that should only remain as a debate. We are yet taking the baby steps in the matured insurance industry.”
